The Challenge of Energy Sustainability and Security

Energy is very much at the top of everyone’s agenda at the moment. It’s widely accepted that the world is in the midst of a climate emergency. Greenhouse gas emissions from human activities, such as transport, power generation and heating are driving climate change.

Governments everywhere are focussed on how to reduce greenhouse gas emissions and decarbonise their economies. In 2016 Germany was one of the first countries to develop a strategy when it adopted its “Klimaschutzplan 2050” (Climate Action Plan). Last year the UK government set out its own Net Zero strategy on how it will meet carbon reduction targets and, just last November here in Scotland, Glasgow hosted COP26, when nations adopted the Glasgow Climate Pact, which aims to turn the 2020s into a decade of climate action and support.

The rise of environmental, social and governance (ESG) considerations has brought climate concerns directly into board rooms of organisations of all sizes. Businesses cannot afford to ignore the move towards a lower carbon economy. For some, this also represents a real opportunity – one that should be positively embraced for a number of reasons:

  • Improving carbon footprint and reducing emissions as part of a company’s “green credentials” is a proven route to building business and winning work.
  • Satisfying ESG considerations internally, from investors and from consumers has significant potential to enhance the value of a business. Investors increasingly see ESG compliant companies as less risky. It can significantly benefit its ability to recruit as well.
  • Improving energy efficiency reduces costs and ultimately improves profitability.

However, since COP26, the impact of the war in Ukraine has brought sharply into focus the need to have not just sustainability energy sources but also access to secure and reliable energy. And the increasing costs of living mean the affordability of energy is becoming a bigger issue for society.

So, on the one hand there is the clear and present need to contribute to climate change action (Sustainability) and on the other hand there is pressure to secure reliable sources of energy (Security).

In the UK, the offshore energy industry has helped for over 50 years to help meet the UK’s energy needs with domestically produced oil and gas. The industry has been trying to promote an expansion into renewable energies for some time, but the present combination of the climate crisis and the energy supply crisis means the pace of change needs to increase.

The industry had already adopted a roadmap designed to help meet energy needs while still supporting climate targets. That means meeting energy demands as much as possible from domestic resources (for increased security and reliability of supply) as well as playing a crucial role in transitioning towards lower carbon energy generation through the development of low carbon technologies including Carbon Capture and Storage (CCS) and supporting the development of a hydrogen economy.

Here in Scotland, under the ScotWind programme, a number of those same energy companies have already bid for the rights to build offshore wind farms with significant energy generation capacity and the Scottish government is currently working with the offshore industry to decarbonise existing oil and gas operations and support new projects including the use of blue and green hydrogen.

That offers a great opportunity for Scotland in particular which has a number of key advantages in the energy transition space: – an abundance of renewable energy resources (both offshore wind and tidal); the UK offshore energy industry’s highly experienced supply chain; decades of working offshore – all of these means Scotland has one of the best ecosystems in Europe for the production of reliable and green energy.

Undoubtedly both Germany and the UK face significant challenges on how to deal with the energy security crisis arising from the reduced natural gas flows from Russia. At the same time, we must continue with plans to decarbonise our economies and companies need to respond to the importance now played by ESG considerations in attracting investment and winning business. Government and business need to work together and there are significant opportunities for those businesses which are prepared to adapt and be at the forefront of the efforts to meet the security and sustainability challenge.


Alasdair Freeman

Partner, Burness Paull LLP